DGM

DGM Minerals Corp. Signs Definitive Agreement to Acquire Self-Storage Properties in Poland and the Czech Republic

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Jan 10, 2014) - DGM Minerals Corp. ("DGM" or the "Company") (TSX-VENTURE:DGM) is pleased to announce, further to its news release issued November 5, 2013, that it has entered into a definitive share purchase agreement dated January 9, 2014 (the "Share Purchase Agreement"), under which DGM has agreed to purchase all of the issued and outstanding shares of five companies which, collectively, own and operate five self-storage stores in Poland and the Czech Republic (the "Assets"). In conjunction with the Share Purchase Agreement, DGM also entered into an asset purchase agreement dated January 9, 2014 (the "Asset Purchase Agreement") with Mr. Guy Pinsent, under which DGM acquired the exclusive right to purchase the Assets from the vendors. Prior to executing the agreements, DGM conducted extensive financial and legal due diligence respecting the Target Companies and the Assets.

When consummated, the transaction will make DGM the largest self-storage chain in Central Europe, a region which management believes is poised for substantial short and long term growth in the self-storage sector.

DGM's President and CEO, Peter Smith, continues to express a great deal of enthusiasm for the proposed transaction: "We've spent a lot of time and resources assessing this opportunity for DGM and we continue to feel that it has outstanding potential. Self-storage is an attractive sector to be in, and this particular opportunity gives us five established self-storage businesses, all purpose-built or renovated specifically for self-storage, and all in central, inner-city locations where real estate values are expected to grow. We also feel there is a significant growth opportunity for self-storage in Central and Eastern Europe, given that a city like Warsaw, for example, with a population close to that of Toronto, has only two self-storage stores, both of which we will acquire under the transaction. However, there still remains a lot of work to be done before the transaction can be closed. Management will continue to update the market as we progress."

The proposed transaction will be a "change of business" transaction ("COB") under the policies of the TSX Venture Exchange, and accordingly requires the approval of DGM's shareholders. In conjunction with the transaction, DGM will consolidate its current issued and outstanding shares on a 10:1 basis (the "Consolidation") and will change its name to "Less Mess Storage Inc." Prior to pursuing the transaction that is the subject of this news release, DGM was listed under the Mining Industry segment, focused on exploring the Notamiche Property in Quebec. In June 2013, DGM determined that it wasn't in its best interests to continue to expend resources on the property. Following completion of the transaction and the acquisition of the Assets, DGM will be listed on the TSX Venture Exchange under the Industrial Industry Segment.

The Share Purchase Agreement

The vendors under the Share Purchase Agreement are Selvaag Eiendom A.S. and Selvaag Self-Storage A.S. (the "Vendors"), each incorporated under the laws of Norway. Each of the Vendors is owned by Selvaag Gruppen A.S., out of Norway. DGM is acquiring five companies (the "Target Companies") under the Share Purchase Agreement: three companies incorporated in Poland (Krakowska House Sp. z o.o., Torunska House Sp. z o.o. and City Self-Storage Sp. z o.o.) and two companies incorporated in the Czech Republic (Selvaag Evropska Building A.S. and City Self-Storage S.R.O.). All of the issued and outstanding shares of Krakowska House Sp. z o.o., Torunska House Sp. z o.o. and Selvaag Evropska Building A.S. (which are property holding companies) are owned by Selvaag Eiendom A.S. All of the issued and outstanding shares of City Self-Storage Sp. z o.o. and City Self-Storage S.R.O. (which are operating companies) are owned by Selvaag Self-Storage A.S. Collectively, the five companies being acquired operate five self-storage stores, two of which are in Warsaw, Poland, and three of which are in Prague, Czech Republic.

Under the Share Purchase Agreement, DGM will acquire the Target Companies for an aggregate purchase price of 14,000,000 Euros, 7,000,000 Euros of which is payable on closing, and 7,000,000 Euros of which will be Vendor financed through DGM's assumption of existing debt owed by the Target Companies to the Vendors.

The 7,000,000 Euros of existing debt has been divided into two equal facilities (A and B) of 3,500,000 Euros each. Facility A will bear interest as follows: for three years from the closing date, the interest rate shall be three-month Euribor plus 2.5%, but in no case shall it exceed 5.0%; and following three years from the closing date until the maturity date (five years after the closing date), the interest rate shall be three-month Euribor plus 8.0%. Facility B will bear interest as follows: for three years from the closing date, the interest rate shall be 5.0%; and following three years from the closing date until the maturity date (five years after the closing date), the interest rate shall be three-month Euribor plus 8.0%. The principal on the facilities shall be repaid as follows: 125,000 Euros on each facility on the first and second anniversaries after closing; 400,000 Euros on each facility on the third and fourth anniversaries after closing; the remaining principal on the fifth anniversary after closing. The existing debt will be secured by a first charge against the four freehold properties owned by the Target Companies.

The Share Purchase Agreement provides that closing of the transaction must occur within 60 days of the date of the Agreement; provided however that the Vendors have agreed to extend the closing date for reasonable administrative delays or to receive TSX Venture Exchange approval of the transaction, as long as DGM has demonstrated by no later than February 15, 2014 that it has secured financing of no less than 7,000,000 Euros to close the transaction.

Upon executing the Share Purchase Agreement, DGM paid a 100,000 Euro deposit to the Vendors. Under the Agreement, if the transaction fails to close because DGM fails to secure necessary financing, the deposit will be forfeited to the Vendors. If the transaction fails to close for any other reason, the deposit will be returned to DGM.

The Assets

The Assets being acquired by DGM are five self-storage stores, each of which has been operating for at least five years. The five stores are operated by the Vendors under the name "City Self-Storage" and will be re-branded by DGM to "Less Mess Storage". Two of the five stores are in Warsaw, Poland, and three are in Prague, Czech Republic. In the case of four of the five stores, DGM will also be acquiring the attached real estate on which such stores operate. The fifth store operates in a leased property and the lease agreement is due for renewal in 2022.

Warsaw Stores

The Target Companies own and operate two stores near the centre of Warsaw, Poland: the Krakowska store and the Torunska store.

The Krakowska store is four kilometres from Warsaw's city center and its lot is approximately 26,000 square feet. The self-storage facility was built in 2006, and has 695 rental storage rooms with a combined self-storage area of approximately 25,000 square feet. The self-storage areas include a retail space and office. The self-storage section of the building has four levels, and there are two additional levels of rental office space above the storage area, with a separate entrance and elevator. The building also has an underground parking garage with 43 parking spaces. Average occupancy of the Krakowska store over the past 12 months to December 13, 2013, has been 93%.

The Torunska store is eight kilometres from Warsaw's city center. The lot is approximately 32,000 square feet. The self-storage facility was built in 2007 and has 747 rental storage rooms with a combined self-storage area of approximately 30,000 square feet, as well as a retail area. The self-storage section of the building has three levels, and the outdoor parking lot has 12 parking stalls. Average occupancy of the Torunska store over the past 12 months to December 13, 2013, has been 80%.

Prague Stores

The Target Companies have three stores located in Prague, Czech Republic: the Holesovice store, the Dejvice store and the Pankrac store. The Holesovice store and the Dejvice store are owned by the Target Company, while the Pankrac store is a leased property.

The Holesovice store is three kilometres from Prague's city center and its lot is approximately 85,000 square feet. The original buildings on the site are comprised of a three level main building and a two level sub-building. These buildings were constructed in 1951 but were then converted through an extensive renovation for self-storage purposes in 2002. There are 556 rental storage rooms with a combined self-storage area of approximately 54,000 square feet and a retail space. These buildings also house a storage area for ancillary products sold by the Target Companies throughout the Czech Republic and Poland, and an open plan office area for central staff, a marketing coordinator and financial controller, both handling Poland as well as the Czech Republic. Average occupancy of the Holesovice store over the past 12 months to December 13, 2013, has been 80%.

The Dejvice store is the newest store of the five operated by the Target Company. It is located five kilometres from Prague's city center and its lot is approximately 30,000 square feet. The self-storage facility was built in 2008 and has 635 rental storage rooms with a combined self-storage area of approximately 28,000 square feet. The self-storage section of the building has six levels, and the outdoor parking lot has 34 parking stalls. Average occupancy of the Dejvice store over the past 12 months to December 13, 2013, has been 67%.

The Pankrac store is the only store of the five that is not owned by the Target Companies. The leased facility is located three kilometres from Prague's city center and consists of three floors of a car parking garage, converted to self-storage use in 2002, and a retail area. The Pankrac store has 633 rental storage rooms with a combined self-storage area of approximately 25,000 square feet. The self-storage section of the building has three levels, and the outdoor parking lot has ten parking stalls. Average occupancy of the Holesovice store over the past 12 months to December 13, 2013, has been 87%.

Financial Information Respecting the Assets

The audited total revenue for all five stores for the 12 months ended September 30, 2013 was $4,155,513, with an unaudited EBITDA for the same period of $2,104,273. Total assets of the Target Companies as of September 30, 2013 were $18,963,990 (audited), and the net book value of the tangible assets of the Target Companies were $16,869,072 (audited), split between tangible assets of $8.4m in Poland and $8.5m in the Czech Republic.

Self-storage revenues for the Target Companies (collectively) have grown 20% over the past three years and EBITDA has grown 36%.

The Asset Purchase Agreement

Under the Asset Purchase Agreement, DGM acquired from Pinsent the exclusive right to purchase the Assets from the Vendors, which exclusive right Pinsent had secured under a letter agreement dated as of October 29, 2013. DGM will also acquire other assets that Pinsent has obtained or developed with respect to his proposed acquisition of the Assets, including certain intellectual property respecting the business to be conducted following the successful acquisition of the Assets (i.e. the "Less Mess" brand and intellectual property).

The consideration payable under the Asset Purchase Agreement is the issuance of 2,300,000 post-Consolidation DGM common shares, as follows: Pinsent will receive 1,300,000 shares; Peter Smith (DGM's President and CEO) will receive 600,000 shares; Michael Raven (DGM's Corporate Secretary) will receive 200,000, and two arm's length parties will receive 100,000 shares each.

The Asset Purchase Agreement is conditional on DGM completing the Consolidation, Pinsent being appointed to DGM's board of directors and approval of the transaction by DGM's board, DGM's shareholders (if required) and the TSX Venture Exchange.

Financing

To finance its acquisition of the Target Companies and the Assets, DGM intends to raise between $12,000,000 and $15,000,000 in a private placement financing. DGM has executed an engagement letter with Euro Pacific Canada ("EuroPac") under which EuroPac will conduct a "best efforts" private placement offering of up to $15,000,000 (subject to an over-allotment option to increase the size of the offering by up to 15% of the base offering size). As compensation, EuroPac will receive: a work fee of $25,000 (plus HST); a cash fee equal to 7% of the aggregate gross proceeds of the financing; and compensation options to acquire the number of securities of DGM as is equal to 7% of the aggregate gross proceeds of the financing. The compensation options shall be exercisable for a period of twenty-four (24) months from closing at an exercise price equal to the issue price of the DGM shares under the offering.

Board of Directors

It is anticipated that following the acquisition of the Target Companies and the Assets, Guy Pinsent and Robin Greenwood will be elected to DGM's board of directors.

Guy Pinsent is an entrepreneur with a background in investment banking (Citibank London, branded consumer team with clients including Bacardi, Diageo and British American Tobacco), the British Foreign Service and real estate investment and development. Mr. Pinsent was formerly a partner at Personal Storage, a private British self-storage business, at the time the sixth largest in the UK, before focussing on the self-storage opportunity in Poland and neighboring markets. Mr. Pinsent's real estate experience includes head of business development at Colliers International Poland, and consulting to a wide range or investors and developers. Mr. Pinsent assisted on the financing, development and sale of Helical Poland's 'Europa Centralna' retail park, an investment of EUR 115 million delivering 720,000 square feet of retail space (Phase 1), one of the largest retail developments in Europe. Mr. Pinsent was educated at Eton College and Cambridge University (Economics MA), lives in Warsaw and speaks fluent Polish.

Robin Greenwood is the current CEO of Storage King UK, an 18 store self-storage chain with stores throughout the United Kingdom. He is also currently the director and treasurer for the UK Self-Storage Association. He was formerly CEO for Extra Space Europe, a Vice President for Shurguard UK and director of sales and marketing for Access Self-storage. Mr. Greenwood has been a senior executive in self-storage for over 25 years, working for some of the world's largest operators during that time.

It is anticipated that Michael Anderson and Thomas Lamb, both current board members of DGM, will not seek re-election at the meeting of DGM's shareholders to be held to approve the transaction that is the subject of this news release.

Further Transaction Details

Further details regarding the transaction will be provided in a Management Information Circular which will be mailed to shareholders of DGM in connection with the meeting of such shareholders to be called to approve the transaction and will be accessible under DGM's SEDAR profile at www.sedar.com shortly following the mailing. DGM plans to give notice of the meeting in January 2014, mail the Management Information Circular in February 2014 and hold the meeting in March 2014. The transaction is expected to close shortly after the meeting.

Completion of the transaction is subject to a number of conditions, including TSX Venture Exchange acceptance and disinterested Shareholder approval. The transaction cannot close until the required Shareholder approval is obtained. There can be no assurance that the transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the Management Information Circular to be prepared in connection with the transaction, any information released or received with respect to the COB may not be accurate or complete and should not be relied upon. Trading in the securities of DGM Minerals Corp. should be considered highly speculative.

The TSX Venture Exchange has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

About the Company

DGM Minerals Corp. is a Vancouver-based company and has its common shares listed on the TSX Venture Exchange. For further information, please refer to the Company's filings on SEDAR (www.sedar.com) or contact the Company by telephone at 778.999.7030.

ON BEHALF OF THE BOARD

Peter Smith, President and CEO

This update contains "forward-looking information" that is based on the Company's current expectations, estimates, forecasts and projections. This forward-looking information includes, among other things, the Company's business, plans, outlook and business strategy. The words "may", "would", "could", "should", "will", "likely", "expect," "anticipate," "intend", "estimate", "plan", "forecast", "project" and "believe" or other similar words and phrases are intended to identify forward-looking information.

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Such factors include, but are not limited to: uncertainties related to the ability of the Company to obtain or maintain an interest in a suitable business, property or properties, changes in economic conditions or financial markets; changes in prices for the Company's products or increases in costs; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological or operational difficulties; and labour relations matters.

This list is not exhaustive of the factors that may affect our forward-looking information. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking information. Except as required by law, the Company disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise.

NEITHER THE TSX-VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX-VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

DGM Minerals Corp.778.999.7030